There is a lot of attention on government contractors who are factoring their invoices for cashflow. Due to major goings on around the planet the U.S. government is buying goods and services at a record rate. Many new and young start-ups are taking advantage of the various requests that need to be fulfilled. But with bigger contracts some cash constrictions. Whether providing a product or service, these contracts eat up a lot of money, quickly.

When contacting a factoring company to help with a new government contract be aware of the NOTICE OF ASSIGNMENT. If you are the PRIME contractor (billing the government directly) and have an FAR (Federal Acquisition Regulation) contract then you need to have the contract amended to put the NOS in place. Contract regulations require that in order for payments to be made to a third party – the lender, there must be an assignment in place that sets the proceeds of the contract to that third party.

Now this is regular paperwork and all banks and lenders prepare them, but you should let your contract officer know right away that your plans will involve getting outside financing. The contract officer has to sign off (they always do) and by giving them a heads up you won’t get bogged down waiting for the NOS to go through proper channels. We are currently funding a contractor who is shipping goods over to a country far away that is getting much attention these days. Trying to get a government employee who is more worried about staying alive than signing some paperwork has been a real challenge!

So if you’re getting into the government contracting game, remember the Notice of Assignment, and put it into play as soon as possible.

A great way to grow a government contracting company is to use commercial financing, particularly receivables factoring. It is the for sure fastest easiest access to working capital there is available. If you choose the right factoring company you will have flexible terms that will allow you to graduate to institutional banking in a smooth transition.

But like everything else with government contracting, the use of financing must conform to FAR (Federal Acquisition Regulation) contract regulations. The Assignment of Claims Act allows the proceeds, or payments, to be made to a third party. Built into FAR is the ability to borrow against future payments that are made from a government agency to its contractor. This is a widely used vehicle to obtain working capital for an ongoing contract. It helps to cash flow payroll, taxes, and materials when fulfilling an awarded contract.

In order to satisfy the regulations, the prime contractor must present a Notice of Assignment to their contract officer. This form, usually prepared by the Factor, must be signed and notarized. It is actually an amendment to the contract authorizing the government to pay the registered third party. Without the â€œNOA,â€ the agency cannot repay the capital source who has made advances on contract payments.

Using the NOA is SOP and should be acknowledged by the CO. Your take away is to be pro-active in notifying the agency you will be using invoice factoring and to expect the NOA. This will save valuable time getting a new contract underway. Knowing you have working capital secured sends a strong statement presenting your company as ready to do business with the government.

On September 14, the Director of OMB Jacob Lew issued a formal memorandum to all Government agencies to speed up the payments to their vendors. This measure, as part of the Prompt Payment Act (PPA) is helpful even though it appears on the surface to be targeted toward helping the struggling economy. Once inserted into the government stream, directives do have a ripple effect as long as there is follow up and management â€“ meaning the Agency heads are going to be asked in November to show they have begun to accelerate their payments.

But what is missing, my good friend Guy Timberlake at The ASBC.org points out, is to take this a step further and add oversight to the prime government contractors to expedite their payments to the sub-contractors. By far the majority of real small businesses working on behalf of the government can be found in the sub-contractor category. Accelerating payments from agencies to the primes without requiring the same prompt payment to the subs is an important missing ingredient to helping the economy grow to create more jobs.

While there is language in the FAR that does require prime contractors to pay their subs, itâ€™s high time to dust off the language and force prudent cash management practices on any contractor that holds back payments as a way to enhance their own cash flow problems. Of course this is a scenario where invoice factoring may help to alleviate working capital issues. Call us right now to learn more how factoring will work for you.

Business writer, Barbara Weltman, has some good information on the upcoming tax season. Small businesses need to be aware of the constant changes to the tax code in order to prepare and take advantage of new rules.
There is an enormous amount of uncertainty about federal taxes for 2010 and 2011. Will proposed tax cuts, such as 50 percent bonus depreciation on equipment purchases, an extension of the research credit, and an increase in the deduction for startup cost for small businesses be enacted this year? Will the current tax cuts expire at the end of 2010, pushing personal tax rates for ordinary income and capital gains considerably higher in 2011 and eliminating special treatment for dividends? Amid this uncertainty, there are some new rules that will take effect in 2011 and they may impact your actions for this year.

The Federal Register was created to provide access to a wide range of Federal government contractor benefits and opportunities for funding. Each day agencies release hundreds of proposed rules and regulations, meeting notices, final rules, and changes to existing rules in the form of the Federal Register. However in their current format these new regulations and opportunities are very difficult to find and process in meaningful ways. One reason this is important is, staying on top of the latest developments within the government opens up the doors unlimited opportunities. One of the biggest problems agency procurement offices face is finding qualified contractors to bid on new contracts. By following what the government is doing, smart contractors can step in and fill the void by addressing changes or requests.

A small band of open source programmers built a site called govpulse.us. The purpose was to address the unyielding amount of data that is poured daily into the Federal Register. Creating the ability to have the Register usable is a bold achievement. By making such documents as the Federal Register searchable, more accessible and easier to digest, govpulse seeks to encourage every citizen to become more involved in the workings of their government and make their voice heard on the things that matter to them, from the smallest to the largest issues.

Flexibility, reliability, and dedication are the main ingredients to pursue when considering a source for your financing. Look no further than the steady growth and dependable service CCA provides all our clients. Click here to learn more.